Transfer of the contract at residual value to a subsidiary of the contracting party

Electronic

Manager:

  • Customer:

    Confidential

  • Role:

    Program Manager

  • Location:

    Germany

  • Turnover:

    approx. EUR 60 million

  • Time frame:

    11 months

  • No. of employees:

    50

About the Customer

The customer is the daughter of a large German concern. The GmbH focuses on electronics and electro-optics (hardware and software) for security and defense products.

Testimonial from –°ustomer

The company management and the Executive Board have rated the result and the process that led to the success positively and valued. After successful completion, the entire team was invited to a celebration. Each team member received a gift in recognition of the achievement.
The former program manager, who was initially unsure and frustrated with the appointment of an outside manager, said he’d never enjoyed his job as much as he did in this crisis phase. He was immediately assigned with the management of another complex project.

Situation (Challenge)

The customer had sold a business field with several programs / products to a subsidiary of a group. However, this group was itself the client for some of the projects.
For one of the contracts, the takeover by the new contract holder was subject to complex technical and commercial conditions, with a non-fixed purchase price (residual contract value). The contractual arrangements for this were interpreted differently by the contracting parties and led to a conflict of interest, open tensions between the contracting parties and consequently to a delay in the contract transfer.
Dr. However, M.K.’s customer had hastily shut down the entire program management (technology, support, supplier management, etc.) – assuming the acceptance of the contract – and was now also vulnerable to the client. He was at the same time in a bad starting position for the leading takeover negotiations.

Solution (Achievement)

Dr. M. K. In the middle of January 20xx was appointed as a program manager with direct reporting line to the management at short notice.
First, the program management team was rebuilt, in which the former program manager was involved in a constructive and motivating way. On all open issues the responsibility of the company was resumed. The necessary technical and contractual activities have been reorganized.
In almost daily meetings, the necessary work was coordinated and the tactical approach to the client and the acquiring company discussed.
In parallel, a team of lawyers and merchants analyzed the commercial and contractual situation in detail and set up a negotiating strategy.
The negotiating Managing Director and the responsible Group Executive Board were regularly informed about work progress, risks and further strategy.
Dr. M. K. was directly involved in the contractual and legal discussions with the other side and was able to provide direct and effective support there.
After 11 months, the renegotiated contracts could be signed and the project transferred to the year-end in a proper condition.
The result of the negotiations (residual purchase value approx. EUR 60 million) exceeded the target value adopted in the business plan by approx. 10%, so that at the level of the GmbH or the Group after dissolution of the commercial risk an additional annual result was generated.